I'm trying to understand about how much money does GOR represent for a school that's in a conference with GOR.


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(05-22-2014 11:08 PM)Strut Wrote:  I'm trying to understand about how much money does GOR represent for a school that's in a conference with GOR.


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The net present value of the school's media payouts for the duration of the contract.

Basically do this formula for each year and sum up the results:
Pv=Fv/[1+r]^t
Present value = Payout amount / (100% + Discount rate) ^ Year in contract

(There's a better way of doing it, but that's the simplest way and it will get you in the ball park)

(05-23-2014 12:14 AM)nzmorange Wrote:  

(05-22-2014 11:08 PM)Strut Wrote:  I'm trying to understand about how much money does GOR represent for a school that's in a conference with GOR.


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The net present value of the school's media payouts for the duration of the contract.

Basically do this formula for each year and sum up the results:
Pv=Fv/[1+r]^t
Present value = Payout amount / (100% + Discount rate) ^ Year in contract

(There's a better way of doing it, but that's the simplest way and it will get you in the ball park)

I think that the ACC contract started last year and hits $20 million in 2020 and last until 2026 and began at $13 million. That's about a yearly growth of 6.5%. Assume a discount rate of 9.5% (that's about how much the stock market grows on average, but really the appropriate discount rate is a matter of debate) and the NPV of the contract at year 1 is $152,887,398, meaning that's about what the buyout would be for the ACC at year 1. However, that number changes every year. If you want, I can shoot you an Excel sheet that will auto calc these calculations with any discount rate, growth rate, etc you want.

Also, like I said earlier, there is a better way to do this, but this way is very easy and good enough for a ball park IMO.

(05-22-2014 11:08 PM)Strut Wrote:  I'm trying to understand about how much money does GOR represent for a school that's in a conference with GOR.


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The agreements are all intentionally vague. There's no dollar figure or even a formula specified. It could be a little or could be a lot, but without knowing the exact money involved, trying to break the agreement is a risky proposition.

(05-23-2014 12:40 AM)nzmorange Wrote:  

(05-23-2014 12:14 AM)nzmorange Wrote:  

(05-22-2014 11:08 PM)Strut Wrote:  I'm trying to understand about how much money does GOR represent for a school that's in a conference with GOR.


Posted from my mobile device using the CSNbbs App

The net present value of the school's media payouts for the duration of the contract.

Basically do this formula for each year and sum up the results:
Pv=Fv/[1+r]^t
Present value = Payout amount / (100% + Discount rate) ^ Year in contract

(There's a better way of doing it, but that's the simplest way and it will get you in the ball park)

I think that the ACC contract started last year and hits $20 million in 2020 and last until 2026 and began at $13 million. That's about a yearly growth of 6.5%. Assume a discount rate of 9.5% (that's about how much the stock market grows on average, but really the appropriate discount rate is a matter of debate) and the NPV of the contract at year 1 is $152,887,398, meaning that's about what the buyout would be for the ACC at year 1. However, that number changes every year. If you want, I can shoot you an Excel sheet that will auto calc these calculations with any discount rate, growth rate, etc you want.

Also, like I said earlier, there is a better way to do this, but this way is very easy and good enough for a ball park IMO.

Not to get off the subject, but I guess accounting is the subject today, can you tell me what the 9.5% discount rate is based on? If it is really based on the expected rate of return of the stock market, then that number seems kinda high. If you can guarantee a number like that between now and 2026, I want to know what stocks you are investing in.

The agreements appear to be any revenues that the school would have received from its conference share of media rights. Since every conference's rights increase gradually over time, there isn't a set amount--its whatever they would be paid out for the duration of the existing conference contract(s).

(05-23-2014 04:00 AM)goofus Wrote:  

(05-23-2014 12:40 AM)nzmorange Wrote:  

(05-23-2014 12:14 AM)nzmorange Wrote:  

(05-22-2014 11:08 PM)Strut Wrote:  I'm trying to understand about how much money does GOR represent for a school that's in a conference with GOR.


Posted from my mobile device using the CSNbbs App

The net present value of the school's media payouts for the duration of the contract.

Basically do this formula for each year and sum up the results:
Pv=Fv/[1+r]^t
Present value = Payout amount / (100% + Discount rate) ^ Year in contract

(There's a better way of doing it, but that's the simplest way and it will get you in the ball park)

I think that the ACC contract started last year and hits $20 million in 2020 and last until 2026 and began at $13 million. That's about a yearly growth of 6.5%. Assume a discount rate of 9.5% (that's about how much the stock market grows on average, but really the appropriate discount rate is a matter of debate) and the NPV of the contract at year 1 is $152,887,398, meaning that's about what the buyout would be for the ACC at year 1. However, that number changes every year. If you want, I can shoot you an Excel sheet that will auto calc these calculations with any discount rate, growth rate, etc you want.

Also, like I said earlier, there is a better way to do this, but this way is very easy and good enough for a ball park IMO.

Not to get off the subject, but I guess accounting is the subject today, can you tell me what the 9.5% discount rate is based on? If it is really based on the expected rate of return of the stock market, then that number seems kinda high. If you can guarantee a number like that between now and 2026, I want to know what stocks you are investing in.

I can't guarantee anything. It was just a placeholder. I figured that the actual number would be debated in the thread. However, I think that has been the average return since 1900, including the great recession and the great depression, so it seemed about as good as any other placeholder. If you have a better number, which you very well might, make your case.

(05-23-2014 07:49 AM)nzmorange Wrote:  

(05-23-2014 04:00 AM)goofus Wrote:  

(05-23-2014 12:40 AM)nzmorange Wrote:  

(05-23-2014 12:14 AM)nzmorange Wrote:  

(05-22-2014 11:08 PM)Strut Wrote:  I'm trying to understand about how much money does GOR represent for a school that's in a conference with GOR.


Posted from my mobile device using the CSNbbs App

The net present value of the school's media payouts for the duration of the contract.

Basically do this formula for each year and sum up the results:
Pv=Fv/[1+r]^t
Present value = Payout amount / (100% + Discount rate) ^ Year in contract

(There's a better way of doing it, but that's the simplest way and it will get you in the ball park)

I think that the ACC contract started last year and hits $20 million in 2020 and last until 2026 and began at $13 million. That's about a yearly growth of 6.5%. Assume a discount rate of 9.5% (that's about how much the stock market grows on average, but really the appropriate discount rate is a matter of debate) and the NPV of the contract at year 1 is $152,887,398, meaning that's about what the buyout would be for the ACC at year 1. However, that number changes every year. If you want, I can shoot you an Excel sheet that will auto calc these calculations with any discount rate, growth rate, etc you want.

Also, like I said earlier, there is a better way to do this, but this way is very easy and good enough for a ball park IMO.

Not to get off the subject, but I guess accounting is the subject today, can you tell me what the 9.5% discount rate is based on? If it is really based on the expected rate of return of the stock market, then that number seems kinda high. If you can guarantee a number like that between now and 2026, I want to know what stocks you are investing in.

I can't guarantee anything. It was just a placeholder. I figured that the actual number would be debated in the thread. However, I think that has been the average return since 1900, including the great recession and the great depression, so it seemed about as good as any other placeholder. If you have a better number, which you very well might, make your case.

Since the parties involved would probably never be fully invested in stocks alone, you would probably want a rate more in line with an long term institutional rate of return, which is probably closer to 5%.

In any case, one important thing to note is that, to my knowledge, none of the GoRs are "evergreen". That is, they aren't automatically renewed for an additional year on an annual basis. What that means is that, as the expiration date nears, their value as a deterrent to departure is lessened considerably from when they were signed. For purposes of speculating on future realignment moves, we shouldn't act as if the expiration of the GoR is like falling off a cliff for the schools involved. It is more like they've been gradually sliding down a hill.

And all of the money from GOR is for home games only?


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(05-23-2014 09:34 AM)Strut Wrote:  And all of the money from GOR is for home games only?


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Generally, I think so. However, it might also include some neutral site games, like the OU-UTexas game in Dallas every year.